Wool on a downer

Just when things were looking up in the wool market, it's taken a quite sudden downturn.

Fine merino wools were hardest hit, with prices down by five per cent on average over the last fortnight.

Lachie Brown is wool sales manager Elders in Victoria. He says too many wool growers tried to take advantage of a surge in the market at the opening of this year's auction season.

The main problem has been China being reluctant to buy due to cuts in Government spending with volatile consumer confidence. Up to 80 per cent of Australia's wool goes to China, with 50 per cent of that going into local garments.

Italian spinners have actually increased their demand for fine wool in the past year.

Mr Brown says, "China is likely to return to the market in the next month, with the Chinese New Year being partly to blame for lack of demand."